Rutte strikes deal on Dutch government

The two largest parties in the Netherlands have struck a coalition deal after six weeks of talks, agreeing to a set of policies that would extend the pro-austerity policies of the previous, more conservative government.

The deal, which was announced on Monday (29 October), sees the leader of the centre-right Liberal Party (VVD), Mark Rutte, continue as prime minister, while the Labour Party (PvdA) will hold the crucial finance post. Support for the European Union and for the eurozone is prominent in the government agreement.

Expectations that Labour would require economic policy to be eased are not borne out by the agreement, which envisages a continuation of austerity measures through the expected lifetime of the government. The government would cut €16 billion in spending by 2017. The reductions would also affect development aid. The previous government launched a €12bn austerity package in April.

The agreement emphasises the government’s intention to ensure that public finances meet the requirements of the EU’s stability and growth pact. Last year, the government posted a budget deficit of 4.7% of gross domestic product (GDP), above the 3% ceiling set in the pact.

“This is a balanced package that will ensure that the Netherlands emerges stronger from the financial crisis,” Rutte said on Monday.

The agreement sets out a pro-European course, declaring “if things go well for Europe, they go well for the Netherlands”. It declares support for a banking union, including a European deposit guarantee scheme and a joint resolution fund and that the European Stability Mechanism should be able to support banks directly. But it also adds caveats, saying it supports strengthening the euro “but not at any price” and stating that it will ask the European Commission to identify what policies “can be transferred to national authorities” under the principle of subsidiarity.

Crucial timing

The terms of the deal and its timing will enable Rutte to enter the crucial closing phases of negotiations on the EU’s long-term financial framework with a mandate to press for curbs on EU spending, a redirection of funding from agricultural policy and a continuation of the Netherlands’ €1bn rebate.

The government’s commitment to closer oversight of the European financial system will be reinforced by measures at the national level. Dutch-based banks would be obliged to sign a legally binding code of conduct, would face criminal charges for violating the code and bankers’ bonuses would be limited to 20% of their salaries.

Other agreements with a resonance at the EU level include the introduction of a 30% quota for women in executive positions in the public sector. Reports suggest that, unlike its predecessor, the new government will not oppose a financial-transaction tax.

The 13-strong government will feature seven Liberals and six Labour ministers. Labour’s leader, Diederik Samsom, will not hold a portfolio, preferring to lead his party’s parliamentary delegation and to propel an Amsterdam city councillor, Lodewijk Asscher, into the post of deputy prime minister.

The cabinet will not be sworn in until next week, but the next finance minister is expected to be Jeroen Dijsselbloem, Samsom’s number two. Labour will also control the foreign ministry, which will be filled by a former state secretary for European affairs, Frans Timmermans, whose career includes a stint (in 1994-95) in the cabinet of Hans van den Broek when he was a European commissioner. Timmermans was also a member of the convention on the Future of Europe in the early 2000s. Another Labour minister will be Ronald Plasterk, a former journalist who used his column in the early 2000s to argue against a European constitution. The defence minister is to be Jeanine Hennis-Plasschaert, who was an MEP from 2004-10 and drafted the European Parliament’s report on the EU-US agreement on the transfer of bank data. Before that, she was a European Commission official.

Rutte has otherwise limited the changes to the composition of the Liberal camp in his second government. Three Liberal ministers are expected to retain their portfolios: Ivo Opstelten (justice), Edith Schippers (health) and Melanie Schultz (infrastructure).

The Labour Party will seek the support of its members on Saturday (3 November), but problems are not foreseen. To form an alternative majority government, Labour would need the support of at least three other parties.